D.C. Week: Sequester to Hit Doc Payments

by David Pittman David Pittman Washington Correspondent, MedPage Today
March 02, 2013

WASHINGTON -- Power brokers in Washington were unable or unwilling to avert automatic spending cuts this week -- including a 2% reduction in Medicare payments -- but in the meantime, congressional committees tackled health system reform.

Docs Brace for Hit from Sequester

Medicare providers stand to absorb $11 billion of the $85 billion in federal spending cuts that started at midnight Friday and will last for the rest of the fiscal year unless Congress takes action by year's end.

Under the sequester, Medicare payments to providers will be cut by 2%, and most nondefense programs will be slashed by roughly 8% starting Friday.

The across-the-board method to limit federal spending has been criticized and deemed harmful by both political parties and nearly all interest groups.

Lawmakers should give Medicare the flexibility to charge patients more or less depending on the relative value of that service, experts told the House Ways and Means Health Subcommittee in a hearing examining Medicare's benefit design. For example, diabetic patients should have lower copayments on eye exams than nondiabetic patients.

"Does it make sense to you that my Medicare patients pay the same copayment for a life-saving cancer drug as a drug that will make their toenail fungus go away?" Mark Fendrick, MD, director of the University of Michigan Center for Value-Based Insurance Design in Ann Arbor, asked lawmakers. "Due to the lack of appropriate incentives, Medicare beneficiaries use too little high-value care and too much low-value care."

"Get the incentives right; behavior will follow as long as there's good information, transparent information about performance for consumers and providers alike," David Goodman, MD, co-principal investigator of the Dartmouth Atlas of Health Care in Hanover, N.H., told members of the Senate Special Committee on Aging.

Meanwhile, Jonathan Blum, PhD, acting principal deputy administrator at CMS, told the Senate Finance Committee Thursday that the next round of initiatives to link physician performance with Medicare payments will focus more on specialists.

More ACA Rules Finalized by CMS

The Centers for Medicare and Medicaid Services (CMS) issued a number of important Affordable Care Act (ACA) final rules Friday that set standards for insurance risk adjustment, cost-sharing reductions, medical loss ratio, and other provisions of the law.

Of note, the rules attempt to make it less beneficial for health insurers to avoid enrolling people with pre-existing conditions.

It also amends the medical loss ratio to ensure health insurance companies include the ACA's premiums subsidies in ratio and rebate calculations starting in 2014.

High Court Allows Amgen Case to Continue

The Supreme Court voted 6-3 on Wednesday to allow a class action lawsuit against drug maker Amgen to move forward in a case that alleged the biotech giant downplayed safety risks of two anemia drugs.

Shareholders in the case said Amgen exaggerated the safety profile of Aranesp and Epogen -- including a heightened risk of cancer -- between 2004 and 2007. The biotech company said the information about the drugs' safety were widely known.

The justices said investors can sue without having to show that any misinformation was reflected in the company's stock price.

Berkeley, Calif.-based Dynavax Technologies said it had received a "complete response letter" from the FDA stating the need for "further safety evaluation" among patients ages 18 to 70, the target age group for its Heplisav vaccine.

"The FDA also continues to express concern that novel adjuvants may cause rare autoimmune events," Dynavax said in a statement. "However, the agency indicated its willingness to continue discussions regarding a more restricted use of Heplisav."

Agencies Asked to Identify Wasteful Spending

A powerful House Committee asked federal agencies on Friday -- including the Department of Health and Human Services (HHS) -- to flag unnecessary or wasteful programs that could be eliminated as an alternative to the spending cuts mandated by sequestration.

"We cannot avert sequestration without a plan to end the undisciplined and unsustainable federal spending that resulted in the sequester in the first place," House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) said a letter sent to the heads or acting heads of 17 federal agencies.

The letter cites recommendations the committee has received from federal inspector generals as examples.

Parity Act Caused Spike in Mental Health Hospital Use

The 2008 Mental Health Parity and Addiction Equity Act increased access to mental health and substance use services in hospitals, a report released Tuesday found.

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